Results For Year Ended 31/03/17 - Replacement

 

 

 

1 AUGUST 2017

TAVISTOCK INVESTMENTS PLC

RESULTS FOR THE YEAR ENDED 31 MARCH 2017

Tavistock Investments Plc ("Tavistock" or "Company") today announces its financial results for the year ended 31 March 2017. 

Financial Highlights:

·      22% increase in revenue to £36.4m (2016: £29.9m)

·      421% increase in adjusted EBITDA to £537,000 (2016: £103,000)

·      104% increase in net assets to £18.2m (2016: £8.9m), including £4.6m of cash (2016: £3.4m)

Operational Highlights:

·      Significant improvement in Group financial performance

o  Cash generation of £497,000 in the second half

·      Reduction of 88% in loss per share from 1.10p to 0.13p

·      Strong growth in Funds Under Management (FUM)

o  332% increase to £769m (2016: £178m)

·      Organic and acquisitive growth

o  Successfully completed the acquisition and integration of Abacus Associates and PB Financial Planning Limited - both well established, profitable and cash generative advisory businesses contributing strongly to the continued growth of the Company

o  Organic growth via dedicated recruitment team

Post-period highlights:

·      Launch of new funds

o  Enhanced the ACUMEN range by launching three new funds to better equip the investment team in managing risk

·      Strengthened management team

o  Appointed Mark Evans as Business Development Director to oversee the Group's organic growth strategy

Brian Raven, Group Chief Executive, said: "I am very pleased with our Group performance this year. We have made significant progress across all key areas of the business and established a solid foundation for future success. This is the product of a robust business model and the hard work of a strong operational team. I am confident that this will be another successful year and look forward to the Group continuing its growth." 

For further information:

Tavistock Investments plc Tel: 01753 867000

Oliver Cooke, Chairman

Brian Raven, Group Chief Executive

 

Arden Partners Plc Tel: 020 7614 5900

William Vandyk

 

Allenby Capital Limited Tel: 020 3328 5656

Nick Naylor

Nick Athanas

 

Templars Communications Limited Tel: 020 3642 3140

Kitty Parry

Malika Shermatova

 

 

TAVISTOCK INVESTMENTS PLC

CHAIRMAN'S STATEMENT

FOR THE YEAR ENDED 31 MARCH 2017

Tavistock's principal objectives are to continue the growth of its investment management business and to further strengthen the profile and performance of its advisory business. I am pleased to report that the Company made strong progress during the year under review and, in particular, I would like to highlight the following achievements.

 

Investment Management

 

Strong growth in Funds Under Management (FUM)

The level of FUM increased by over 332% to £769m with £603m being managed on a discretionary basis.  This rate of growth is significantly higher than in the previous financial year when it grew by 29% from £138m at 31 March 2015 to £178m at 31 March 2016.

 

Launch of new funds

Since the year end, the Company has enhanced its range of risk progressive funds by launching the Acumen Bond Portfolio, the Acumen Equity Portfolio and the Acumen Strategic Portfolio. These additional funds better equip the Tavistock Wealth investment team in managing risk across the entire volatility curve as demonstrated in the diagram which can be found at  https://www.rns-pdf.londonstockexchange.com/rns/6432M_-2017-7-31.pdf

 

Advisory

 

Growth through Acquisition

The Company completed the acquisition of two well established, profitable and cash generative advisory businesses, Abacus Associates Financial Services Limited and PB Financial Planning Limited. Both businesses have now been integrated into the Group and are contributing strongly to our continued growth.

 

Organic Growth

Since acquisition, Abacus and PB Financial Planning have recruited 24 additional advisers, taking their total to 73. A dedicated recruitment team has now been established to build further on this organic growth.

 

Strong Relationships

The Group has self-employed advisory networks of both Registered Individuals (RIs) and Appointed Representative firms (ARs), as well as employed advisers within PB Financial Planning.

 

Within the RI operation, the Group exclusively works with advisers whose businesses it is keen to acquire when they retire.

 

Similarly, the Group has established a new AR operation during the year, The Tavistock Partnership, which works only with firms that we would welcome aboard if the principals decided to sell them. Initially, 39 firms with whom the Group has agreed to develop a closer commercial relationship have transferred out of Tavistock Financial into this new network business.

 

Group Performance

 

There is a direct relationship between the Group's profitability and the level of funds being managed within its own portfolios. In addition, the fees earned by certain third parties diminish on an incremental basis as the level of such funds rise, which in turn leads to improved margins.

 

There has been a marked improvement in the Group's financial performance as a consequence of the sharp rise in discretionary FUM that was achieved during the year under review. As the Group has a very high level of FUM retention, this positive impact will continue to be reflected in future years' results.

 

The reported level of Adjusted EBITDA has risen from £103k for the year to 31 March 2016 to £537k, and in the final quarter of the year under review the Group achieved profitability at the pre-tax level for the first time.  The loss per share fell by 88% from 1.1p per share for the previous year to 0.13p in the current year.

 

During the second half of the financial year, the Group succeeded in generating some £497k of cash from operations. Of this amount, some £96k was generated in the third quarter of the year and £401k was generated in the fourth quarter. This positive trend was in marked contrast to the first half of the year, during which period Group operations absorbed over £950k of cash. The Group has continued to generate cash from its operations, albeit at a lower rate, since the balance sheet date.

 

As the Group's investment management business has a comparatively fixed cost base and is already trading profitably, further increases in the level of FUM will have an increasingly positive impact on the Group's profitability.

 

Investing for Growth

 

Our initial focus on establishing the Group was to acquire advisory businesses that would recommend the use of Tavistock's investment management business where appropriate to the needs of their clients. Once Tavistock Wealth had achieved a successful track record, and with it a recognition for excellent investment management, we began marketing to advisory firms outside of the Group. This has required significant investment in a specialist business development team and whilst still at an early stage, results are most encouraging.

 

The introduction of funds from clients outside the Group has the benefit of increasing revenues without the risks and costs associated with acquiring additional advisory businesses and providing financial advice. We are also now investing in the creation of an international operation.

 

The Group has also strengthened its operational management team with the focus being on the achievement of greater levels of organic growth.

 

Whilst these investments are in the best long-term interests of the business, in the short term, they inevitably have an adverse impact on the level of reported performance.

 

Financial Performance

 

As stated above, the Group's financial performance showed a marked improvement in the second half of the year, reflecting the contribution made by the two acquired businesses and the sharply increased level of FUM.

 

Adjusted EBITDA is highlighted in the table below, and is considered to be the most appropriate measure of the Group's performance as it removes the distorting effect of one-off gains and losses that arise on acquisitions and the impact of non-cash items.

 

The Group's financial performance during the year can be summarised as follows:

 

	6 months ended 30 Sept 2016 H1 £'000	6 months ended 31 Mar 2017 H2 £'000	Year ended 31 Mar 2017 Full Year £'000
Gross Revenues	16,911	19,488	36,399
Adjusted EBITDA	109	428	537
Depreciation, amortisation & loss on fixed asset disposals	(466)	(316)	(782)
Share based payments	(214)	(92)	(306)
Acquisition related costs	(117)	(232)	(349)
Loss from Operations	(688)	(212)	(900)

 

The Group's financial performance during the past two years can be summarised as follows.

 

	Year ended 31 Mar 2016 £'000	Year ended 31 Mar 2017 £'000	Movement
Gross Revenues	29,850	36,399	22% increase
Adjusted EBITDA	103	537	421% increase
Depreciation, amortisation & loss on fixed asset disposals	(928)	(782)	16% decrease
Share based payments	(528)	(306)	42% reduction
Acquisition related costs	(1,416)	(349)	75% reduction
Loss from Operations	(2,769)	(900)	67% reduction
Loss per share	1.10p	0.13p	88% reduction
Net assets at year end	8,898	18,181	104% increase
Cash Resources at year end	3,385	4,558	35% increase

 

Future Prospects

 

Much remains to be done, but a great deal has been achieved over the last year through the hard work and dedication of the management team, with the support of our excellent staff.  I would like to acknowledge the significant contribution that they have all made and to thank them for it.

 

Recent political events in the UK, the USA and elsewhere, as well as the uncertainties surrounding Brexit have done much to unsettle markets. However, our disciplined approach to global diversification across asset classes, our cautious approach to the UK bond market and the use of currency hedging has enabled our investment portfolios to continue to perform well.

 

The Group has now reached an inflection point, with the growth in FUM leading to increased margins, a continuing improvement in adjusted EBITDA performance and the generation of cash from operations.  This can be seen in the charts at

 

http://www.rns-pdf.londonstockexchange.com/rns/6432M_-2017-7-31.pdf

http://www.rns-pdf.londonstockexchange.com/rns/6432M_1-2017-7-31.pdf

 

The benefit of our investments in organic growth may not be seen until the 2018/19 financial year. However, even modest levels of benefit, together with continued hard work from the management team, will enable the Company to report improved results in the year to come. I look forward to updating you further.

 

 

Oliver Cooke

Chairman

31 July 2017

 

 

STRATEGIC REPORT

FOR THE YEAR ENDED 31 MARCH 2017

The Company's prime objective is to continue the growth of its investment management business and to improve the profile and performance of its advisory business.

 

During the period under review, the Board's focus was on enhancing the investment management business through the achievement of significant growth in the level of FUM, the development and launch of three new Acumen funds to better equip the investment management team in managing risk across the entire volatility curve and the offering the Group's investment management services to firms outside of the Group.

 

The Board's focus was also on the development of the Group's advisory business through the acquisition of two well established, profitable, cash generative advisory businesses, Abacus Associates and PB Financial Planning, and the recruitment of additional advisors into these businesses.

 

In addition, the Board took steps to strengthen the management team and to invest in future growth. The Chairman's Statement contains further details on the progress and performance of the Group. In the current financial year, the Board's focus will be on the following areas:

·      continuing the growth in FUM,

·      continuing the provision of the Group's investment management services to firms outside of the Group,

·      developing an overseas operation,

·      continuing organic growth through the recruitment of additional advisers, and

·      potentially, through further selective acquisitions.

 

Risks and Uncertainties:

 

The principal risks facing the business are the continued growth in the level of FUM and continued recruitment within the advisory business.

 

There can be no certainty that the rapid pace at which FUM grew in the year under review will continue into the future or that the business will continue to attract new advisers at the same pace. However, a great deal has been achieved by the management team over the last year, including the strengthening of the team itself in areas of particular focus. The Board remains confident that good progress will continue.

 

Political uncertainty in the UK, as well as in Europe and in the US, together with the uncertainties surrounding BREXIT, will continue to unsettle markets. However, the Board is confident that the Group's disciplined approach to global diversification across asset classes and the use of currency hedging will continue to serve the investment business well.

 

The Company continues to face the usual risks of operating within a regulated environment, but to mitigate these risks the Board actively promotes an ethos and culture in which the client is placed at the centre of everything that the Company does.

 

The Board considers that the Company has sufficient working capital for its current needs.

 

Future Prospects:

 

The Company has reached an inflection point in its development and has begun to generate cash as well as report operating profits, which leads the Board to anticipate the reporting of improved performance over the coming year. This is a time of great opportunity for the Company and I look forward to reporting to you in the near future on the next milestones that our Company achieves.

 

Approved by the Board of Directors and signed on its behalf by

 

 

Oliver Cooke

Chairman

31 July 2017

 

 

DIRECTORS' REPORT

FOR THE YEAR ENDED 31 MARCH 2017

The Directors are pleased to present their report on the audited financial statements of the Group for the year ended 31 March 2017.

 

Principal Activities, Review of the Business and Future Developments

 

The principal activities of the Group during the period were the provision of support services to a network of financial advisers and the provision of investment management services. The key performance indicators recognised by management are operating profit, as represented by EBITDA, and the level of funds under management by the Group.

 

An overall review of the Group's trading performance and future prospects is given in the Chairman's Statement and in the Strategic Report. The Group is not materially impacted by environmental matters and as a consequence does not offer comment on them.

 

Substantial shareholdings

 

The Company has been advised of the following interests in more than 3% of its ordinary share capital as at 24 July 2017:

 

Name	Number of shares	% of Ordinary shares
Brian Raven	63,219,379	11.77%
Andrew Staley	52,294,667	9.73%
City Financial	48,333,333	9.00%
Christopher Peel	30,159,960	5.61%
Kevin Mee	27,066,666	5.04%
Paul Millott	27,000,000	5.03%
Oliver Cooke	26,188,556	4.88%
Malcolm Harper	21,000,000	3.91%

Directors

The Directors of the Company during the period were:

 

Executives:

Oliver Cooke

Brian Raven

 

Non - Executives:

Roderic Rennison

Philip Young

 

Oliver Cooke

Chairman, aged 62

 

Oliver has over 35 years of financial and business development experience gained in a range of quoted and private companies including over fifteen years' experience as a public company director. He has considerable experience in the fields of strategic transformation, acquisitions, disposals and fundraisings. Oliver is a Chartered Accountant and a Fellow of the Chartered Association of Certified Accountants.

 

Brian Raven

Group Chief Executive, aged 61

 

Brian has been involved in the financial services sector since 2010. He has a wide range of business experience, having held many sales and general management posts at senior management and board level, including running public companies on both AIM and the Official List. Most notably, in 1991 Brian founded Card Clear Plc, subsequently renamed Retail Decisions plc, a business engaged in combating the fraudulent use of plastic payment cards. He led the company until 1998 by which time it was an international group, listed on AIM, with a market capitalisation of some £100 million. As a principal, Brian has been responsible for identifying, negotiating and integrating numerous acquisitions, as well as for delivering organic growth.

 

Roderic Rennison

Non-Executive Director, Chairman of Remuneration Committee, aged 62

 

Roderic has more than 40 years of experience in financial services encompassing a variety of roles including sales, strategy, product development, proposition, operations and latterly acquisitions, mergers, and integrations together with corporate affairs, risk and regulatory matters. He provides consultancy services in the sector to a range of providers, fund managers and intermediaries and particularly specialises on RDR, for which he chaired the professionalism and reputation work stream.

 

Philip Young

Non-Executive Director, Chairman of Audit Committee, aged 43

 

Philip began his career in 1996 at a small financial consultancy business specialising in complex regulatory issues, CCL, in Macclesfield. Philip moved to Bankhall Investment Associates Ltd in 1998, where he worked initially in the compliance area, then moved to become Commercial Manager for Bankhall's e-commerce department. In 2003, he co-founded threesixty services LLP and threesixty support LLP, with a number of colleagues, and became an equity partner. threesixty has grown to become one of the most significant forces in adviser support in the UK, providing professional business services to over 700 firms with more than 7,000 advisers. threesixty was acquired by Standard Life Plc in 2010, after which Philip was appointed Managing Director.

 

Corporate Governance

 

The Board confirms that the Group has had regard, throughout the accounting period, to the provisions set out in the UK Corporate Governance Code which was issued by the Financial Reporting Council in April 2016. Whilst not required to do so the Directors, as a matter of best practice, have voluntarily endeavoured to comply with those of the provisions which they consider to be relevant to a company of this size.

 

The Board does not consider the Group to be sufficiently large to warrant the establishment of a dedicated internal audit function.

 

Diversity

 

Tavistock is an equal opportunities employer and does not discriminate against staff on the basis of disability, gender, ethnicity or sexual orientation.

 

The Board of Directors

 

The Board currently comprises two executive Directors and two non-executive Directors.

 

The non-executive Directors have a strong compliance background and are considered to be independent. All Directors are required to stand for re-election at least once in every three years.

 

All members of the Board are equally responsible for the management and proper stewardship of the Group. The non-executive Directors are independent of management and free from any business or other relationship with the Company or Group and are thus able to bring independent judgment to issues brought before the Board.

 

The Board meets at least ten times per year and more frequently where necessary to approve specific decisions. Directors may take independent professional advice at the Company's expense.

 

The Audit Committee

 

The Audit Committee is comprised of the Chairman, who is a Chartered Accountant and has been a partner in a public practice, and the independent non-executive Directors and determines the terms of engagement of the Company's auditors and, in consultation with the auditors, the scope of the audit. The Audit Committee receives and reviews reports from management and the Company's auditors relating to the interim and annual accounts and the accounting and internal control systems in use throughout the Company. The Audit Committee has unrestricted access to the Company's auditors.

 

During the year under review the Audit Committee met twice.

 

The Nomination Committee

 

The Directors do not consider it necessary for a company of this size to have a separate Nomination Committee.

 

Communication with shareholders

 

The Chairman and the Chief Executive are available to meet with institutional shareholders and to answer questions from private shareholders. The Board is open to receiving constructive input from shareholders. Each shareholder receives the annual report, which contains the Chairman's Statement. The annual and interim reports, together with other corporate press releases are made available on the Company's website www.tavistockinvestments.com. The Annual General Meeting provides a forum for shareholders to raise issues with the Directors. The Notice convening the meeting is issued with 21 clear days' notice. Separate resolutions are proposed on each substantially separate issue.

 

Going concern

 

The Directors confirm that they are satisfied the Group has adequate resources to continue its business for the foreseeable future and on this basis; they continue to adopt the going concern basis in preparing the accounts.

 

Financial instruments

 

Details of the use of financial instruments by the Group are contained in Note 14 of the financial statements.

 

Share capital

 

Changes to share capital during the period are given in Note 15 to the accounts onwards.

 

Charitable and Political Donations

 

The Group did not make any political donations in the period but made charitable donations totalling £13,843 (2016: £5,000).

 

Dividends

 

The Directors do not propose a final dividend (2016: £Nil)

 

Auditors

 

A resolution reappointing haysmacintyre will be proposed at the Annual General Meeting in accordance with S489 of the Companies Act 2006.

 

Supplier payment policy

 

The Group's policy is to agree terms of payment with suppliers when entering into a transaction; ensure that those suppliers are aware of the terms of payment by including them in the terms and condition of the contract and pay in accordance with contractual obligations. Trade creditors at 31 March 2017 represented 14 days' purchases (2016: 7 days).

 

Internal control

 

The Directors are aware of the UK Corporate Governance Code which was issued by the Financial Reporting Council in April 2016. The key elements of the systems, which have regard to the size of the Group, are that the Board meets regularly and takes the decisions on all material matters, the organisational structure ensures that responsibilities are defined and authority only delegated where appropriate, and that regular management accounts are presented to the Board to enable the financial performance of the Group to be analysed.

 

The Directors acknowledge that they are responsible for the system of internal control which is established in order to safeguard the assets, maintain proper accounting records and ensure that financial information used within the business or published is reliable. Any such system of control can, however, only provide reasonable, not absolute, assurance against material misstatement or loss.

 

In preparing the financial statements, the Directors are required to:

 

·      select suitable accounting policies in accordance with IAS 8 Accounting Policies, changes in Accounting Estimates and Errors and then apply them consistently;

·      present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information; provide additional disclosures when compliance with the specific requirements in IFRSs is insufficient to enable users to understand the impact of particular transactions, other events and conditions on the entity's financial position and financial performance; and

·      state that the Group has complied with IFRSs, subject to any material departures disclosed and explained in the financial statements, and make judgments and estimates that are reasonable and prudent.

 

Directors' responsibilities

 

The Directors are responsible for preparing the annual report and financial statements in accordance with applicable law and regulations.

 

Company law requires the Directors to prepare financial statements for each financial period.  Under that law the Directors have elected to prepare the Group financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union and the Company financial statements in accordance with United Kingdom Generally Accepted Accounting Practice United Kingdom Accounting Standards and applicable law.  Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and Company and of the profit or loss of the Group for that period. 

 

The Directors are also required to prepare financial statements in accordance with the rules of the London Stock Exchange for companies trading securities on the Alternative Investment Market. 

 

In preparing these financial statements, the Directors are required to:

 

·       select suitable accounting policies and then apply them consistently;

·       make judgments and estimates that are reasonable and prudent;

·       for the Group financial statements, state whether they have been prepared in accordance with IFRSs as adopted by the European Union;

·      for the parent company financial statements, state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; and

·      prepare the financial statements on the going concern basis unless it is inappropriate to presume that the group and the parent company will continue in business.

 

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group's transactions and disclose with reasonable accuracy at any time the financial position of the Group and enable them to ensure that the financial statements comply with the requirements of the Companies Act 2006.  They are also responsible for safeguarding the assets of the Group and for taking reasonable steps for the prevention and detection of fraud and other irregularities.

 

Website publication

 

The Directors are responsible for ensuring the annual report and the financial statements are made available on a website.  Financial statements are published on the Company's website in accordance with legislation in the United Kingdom governing the preparation and dissemination of financial statements, which may vary from legislation in other jurisdictions.  The maintenance and integrity of the Company's website is the responsibility of the Directors.  The Directors' responsibility also extends to the ongoing integrity of the financial statements contained therein.

 

Directors' interests

 

The Directors beneficial interests in the Ordinary Share Capital and options to purchase such shares were as follows:

 

	Ordinary shares of 1p each
	31 March 2017		31 March 2016
	Share options	Shares	Share options	Shares
Executive Directors:
Oliver Cooke	1,600,000	25,388,556	1,600,000	2,078,206
Brian Raven	1,600,000	62,319,379	1,600,000	16,455,295
Non-executives Directors:
Roderic Rennison Philip Young	- -	250,000 500,000	- -	250,000 500,000

 

Research and Development

 

The Group is developing a software system for use by its advisers but has not undertaken any other any research and development activities

 

Directors' statement as to disclosure of information to auditors

 

The Directors have taken all of the steps required to make themselves aware of any information needed by the Group's auditors for the purposes of their audit and to establish that the auditors are aware of that information.

 

The Directors are not aware of any audit information of which the auditors are unaware.

 

Approved by the Board of Directors and signed on its behalf by

 

Oliver Cooke

Chairman

 

31 July 2017

 

 

REMUNERATION REPORT

FOR THE YEAR ENDED 31 MARCH 2017

Compliance

Described below are the principles that the Group has applied in relation to Directors' remuneration.

 

 

The Remuneration Committee

The Remuneration Committee comprises the non-executive Directors.  Mindful of the need to attract, retain and reward key staff, the Committee reviews the scale and structure of the executive Directors' and senior employees' remuneration and the terms of their service or employment contracts, including share option schemes and other bonus arrangements.

 

The remuneration of, and the terms and conditions applying to, the non-executive Directors are determined by the entire Board.

 

During the year under review, the Remuneration Committee met three times and all members attended.

 

 

Share options

The share options granted to the Directors under the Company's EMI (Enterprise Management Incentive) Share Option Scheme are as follows.

 

	Number at start of period	Issued in the period	Converted in the period	Exercise price (pence)	Number at end of period	Date from which exercisable	Expiry date
Executive Directors
Oliver Cooke	800,000	-	-	5.25	800,000	October 2017	October 2024
Oliver Cooke	800,000	-	-	5.25	800,000	October 2019	October 2024
Brian Raven	800,000	-	-	5.25	800,000	October 2017	October 2024
Brian Raven	800,000	-	-	5.25	800,000	October 2019	October 2024
G Ordinary Shares
Oliver Cooke	50,000	-	50,000	1.00	-	July 2016	July 2018
Brian Raven	50,000	-	50,000	1.00	-	July 2016	July 2018

 

The market price of the shares at 31 March 2017 was 2.625 pence (2016: 4.625 pence) and the range during the financial period was 2.60 pence to 7.75 pence.

 

During the year both Oliver Cooke and Brian Raven exercised the options, granted to them under the terms of the Company's EMI Scheme, over 50,000 G Ordinary Shares, which as a class were then converted with the approval of Shareholders into 45,854,034 Ordinary Shares.

 

After the balance sheet date, on 13 April 2017, the Company announced that it had inter alia, granted options over an additional 10,000,000 shares to each of Oliver Cooke and Brian Raven with an exercise price of 5.25p per share, which represented a premium of 86.2% over the Company's then share price. In each case, the vesting of 5,000,000 of the shares is conditional upon the achievement by the Group of £5 million of pre-tax profit in a single year and the vesting of the other 5,000,000 shares is conditional upon the growth of the funds managed by the group to £1.5 billion.

 

Service contracts

The term of the Directors' service contracts can be summarised as follows:

 

Executive Directors	Commencement date		Term
Oliver Cooke	3 May 2013		Fixed to 31 March 2020, terminable thereafter on twelve months' notice
Brian Raven	12 May 2014		Fixed to 31 March 2020, terminable thereafter on twelve months' notice
Non-executive Directors
Roderic Rennison	12 May 2014		Initial term 2 years, terminable at any time on three months' notice
Philip Young		12 May 2014	Initial term 2 years, terminable at any time on three months' notice

 

Directors' remuneration

 

Details of each Director's remuneration are provided in Note 5 to the financial statements entitled Staff Costs.

 

On behalf of the Board

 

Oliver Cooke

Chairman

 

31 July 2017

 

 

 

We have audited the financial statements of Tavistock Investments Plc for the year ended 31 March 2017 which comprise the consolidated statement of comprehensive income, the Group and parent company statements of financial position, the Group and parent company statements of changes in equity, the Group and parent company cash flow statements and the related notes. The financial reporting framework that has been applied in the preparation of the Group financial statements is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union and, as regards the parent company financial statements, UK Generally Accepted Accounting Principles ("UK GAAP") including Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and Republic of Ireland and the provisions of the Companies Act 2006.

This report is made solely to the Company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an auditors' report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members as a body, for our audit work, for this report, or for the opinions we have formed.

 

Respective responsibilities of Directors and auditors

 

As explained more fully in the statement of Directors' responsibilities, the Directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's (APB's) Ethical Standards for Auditors.

 

Scope of the audit of the financial statements

 

A description of the scope of an audit of financial statements is provided on the APB's website at www.frc.org.uk/apb/scope/private.cfm.

 

Opinion on financial statements

 

In our opinion:

• the financial statements give a true and fair view of the state of the Group's and the parent company's affairs as at 31 March 2017 and of the Group's loss for the year then ended;

• the financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union;

• the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.

 

Opinion on other matters prescribed by the Companies Act 2006

 

In our opinion, based on the work undertaken in the course of the audit, the information given in the Strategic Report and Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements and such reports have been prepared in accordance with applicable legal requirements.

 

In light of our knowledge and understanding of the Group parent company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic Report and the Directors' Report.

 

Matters on which we are required to report by exception

 

We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:

• adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or

• the parent company financial statements are not in agreement with the accounting records and returns; or

• certain disclosures of Directors' remuneration specified by law are not made; or

• we have not received all the information and explanations we require for our audit.

 

Simon Wilks (Senior Statutory Auditor)

For and on behalf of haysmacintyre

26 Red Lion Square

London

WC1R 4AG

 

31^st July 2017

 

 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 MARCH 2017

		Year ended	Year ended
		31 March	31 March
		2017	2016
	Note	£'000	£'000
Revenue - continuing operations	3	36,399	29,850
Cost of sales - continuing operations		(28,635)	(24,175)
		------------	------------
Gross profit		7,764	5,675
Administrative expenses- continuing operations		(8,664)	(8,444)
		--------------	--------------
Loss from Operations	4	(900)	(2,769)
Memorandum: Adjusted EBITDA		537	103
Depreciation & amortisation		(782)	(736)
Intangible impairment & loss on disposals		-	(192)
Share based payments		(306)	(528)
Acquisition related costs		(349)	(1,416)
		--------------	--------------
Loss from Operations		(900)	(2,769)
Finance costs		(205)	(31)
Finance income		1	8
		------------	------------
Loss before taxation and attributable to equity holders of the parent		(1,104)	(2,792)
Taxation	6	528	375
		------------	------------
Loss from continuing operations   Discontinued operations (net of tax)   Loss after taxation and attributable to equity holders of the parent and total comprehensive income for the period		(576)   - ------------   (576)	(2,417)   (766) ------------   (3,183)
		======	======
Loss per share (continuing operations)
Basic	7	(0.13)p	(1.10)p
		======	=======

 

The notes below form part of the group financial statements.

 

 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 31 MARCH 2017

		31 March 2017		31 March 2016
		£'000	£'000	£'000	£'000
ASSETS
Non-current assets
Property, plant and equipment	8		381		257
Intangible assets	9		19,954		11,969
			-----------------		-----------------
Total non-current assets			20,335		12,226
Current assets
Trade and other receivables	10	2,149		3,705
Cash and cash equivalents		4,558		3,385
		-----------------		-----------------
Total current assets			6,707		7,090
			-----------------		-----------------
Total assets			27,042		19,316
LIABILITIES
Current liabilities	11		(5,319)		(7,826)
Non-current liabilities
Other payables	11		(3,100)		(250)
Provisions	12		(46)		(1,640)
Deferred taxation	13		(396)		(702)
			------------------		------------------
Total liabilities			(8,861)		(10,418)
			------------------		------------------
Total net assets			18,181		8,898
			=========		=========
Capital and reserves attributable to owners
of the parent
Share capital	15		12,685		10,262
Share premium			27,818		20,688
Retained deficit			(22,322)		(22,052)
			------------------		------------------
Total equity			18,181		8,898
			=========		=========

 

The financial statements were approved by the Board and authorised for issue on 31^st July 2017.

 

Oliver Cooke

Chairman

 

The notes below form part of the group financial statements.

 

 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 MARCH 2017

	Share capital	Share premium	Retained deficit	Total equity
	£'000	£'000	£'000	£'000
31 March 2015	10,245	20,576	(19,397)	11,424
	--------------	--------------	--------------	--------------
Issue of shares	17	112	-	129
Loss after tax and total comprehensive income	-	-	(3,183)	(3,183)
Equity settled share based payments	-	-	528	528
	--------------	--------------	--------------	--------------
31 March 2016	10,262	20,688	(22,052)	8,898
	--------------	--------------	--------------	--------------
Issue of shares	2,423	7,130	-	9,553
Loss after tax and total comprehensive income	-	-	(576)	(576)
Equity settled share based payments	-	-	306	306
	--------------	--------------	--------------	--------------
31 March 2017	12,685	27,818	(22,322)	18,181
	--------------	--------------	--------------	--------------

 

 

The notes below form part of the group financial statements.

 

 

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 31 MARCH 2017

		Year ended 31 March 2017		Year ended 31 March 2016
		£'000	£'000	£'000	£'000
Cash flows from operating activities
Loss before tax   Adjustments for:			(1,104)		(3,558)
Share based payments			306		528
Depreciation on property plant and equipment			93		48
Amortisation of intangible assets			689		688
Disposal of intangible assets			-		192
Deferred consideration adjustment			-		1,263
Net Finance costs			204		23
			-----------------		-----------------
Cash flows from operating activities before changes
in working capital			188		(816)
Decrease/(increase) in trade and other receivables			2,068		739
Decrease in trade and other payables			(2,589)		(1,316)
Corporation tax paid			(160)		(87)
			-----------------		-----------------
Cash used in operations			(493)		(1,480)
Investing activities
Finance income		1		8
Development of intangible assets		(199)		(275)
Purchase of property, plant and equipment		(180)		(230)
Proceeds on disposals		50		489
Cash on acquisition		2,009		256
Acquisition of subsidiaries		(4,839)		(220)
		-----------------		-----------------
Net cash (absorbed)/generated from investing activities			(3,158)		28
Financing activities
Finance costs		(205)		(31)
New loan		2,000		-
Issue of new share capital (net of costs)		3,029		129
		-----------------		-----------------
Net cash from financing activities			4,824		98
			-----------------		-----------------
Net increase/(decrease) in cash and cash equivalents			1,173		(1,354)
Cash and cash equivalents at beginning of the period			3,385		4,739
			------------------		------------------
Cash and cash equivalents at end of the period			4,558		3,385
			=========		=========

 

The notes below form part of the group financial statements.

 

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 MARCH 2017

1.            ACCOUNTING POLICIES

 

Principal accounting policies

The Company is a public company incorporated and domiciled in the United Kingdom. The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the periods presented, unless otherwise stated.

 

Basis of preparation

The financial statements have been prepared in accordance with International Financial Reporting Standards, International Accounting Standards and Interpretations (collectively IFRS) issued by the International Accounting Standards Board (IASB) as adopted by the European Union ("adopted IFRSs") and those parts of the Companies Act 2006 which apply to companies preparing their financial statements under IFRSs.

 

Changes in accounting policies

Standards issued but not yet effective at the date of issuance of the Group's financial statements are listed below:

 

IFRS 15 Revenue from Contracts with Customers (effective from 1 April 2018)

 

The implementation of this standard is not expected to have any material effect on the Group's financial statements.

Basis of Consolidation

The Group comprises a holding company and a number of individual subsidiaries and all of these have been included in the consolidated financial statements in accordance with the principles of acquisition accounting as laid out by IFRS 3 Business Combinations.

 

               Revenue recognition

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. All such revenue is reported net of discounts and Value Added Tax. Revenue represents either gross Independent Financial Adviser ("IFA") income or investment management fees receivable in respect of the period. This revenue is recognised as and when it is earned and is calculated on a monthly basis.

 

Intangible assets

Intangible assets include goodwill arising on the acquisition of subsidiaries and represents the difference between the fair value of the consideration payable and the fair value of the net assets that have been acquired. The residual element of Goodwill is not being amortised but is subject to an annual impairment review.

 

Also included within intangible assets are various assets separately identified in business combinations (such as FCA permissions, established systems and processes, adviser and client relationships and brand value) to which the Directors have ascribed a commercial value and a useful economic life. The ascribed value of these intangible assets is being amortised on a straight-line basis over their estimated useful economic life, which is considered to be between 5 and 10 years.

 

Internally generated intangible assets

Internally generated assets are capitalised when the technical feasibility of completing the asset so that it will be available for use is confirmed, there is a demonstrable ability to use the asset and probable future economic benefits will flow from it.  Internally generated intangible assets are measured at cost and amortised over a useful life of 5 years.

 

Financial assets

Loans and receivables: These assets are deemed to be non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise principally through the provision of goods and services to customers (trade receivables), but also incorporate other types of contractual monetary asset. They are carried at amortised cost using the effective interest rate method.

 

Cash and cash equivalents: These include cash in hand and deposits held at call with UK banks.

 

Financial liabilities

Other financial liabilities include trade payables and other short-term monetary liabilities, which are initially recognised at fair value and subsequently carried at amortised cost using the effective interest method.

 

Share based payments

Where share options are awarded to employees, the fair value of the options at the date of grant is charged to the statement of comprehensive income on a straight-line basis over the vesting period. Non-market vesting conditions are taken into account by adjusting the number of options expected to vest at each statement of financial position date so that, ultimately, the cumulative amount recognised over the vesting period is based on the number of options that eventually vest. Market vesting conditions are factored into the fair value of the options granted. The cumulative expense is not adjusted for failure to achieve a market vesting condition.

 

Fair value is calculated using the Black-Scholes model, details of which are given in Note 16.

 

Property, plant and equipment

Property, plant and equipment are stated at cost net of accumulated depreciation and provision for impairment. Depreciation is provided on all property plant and equipment, at rates calculated to write off the cost less estimated residual value, of each asset on a straight-line basis over its expected useful life. The residual value is the estimated amount that would currently be obtained from disposal of the asset if the asset were already of the age and in the condition expected at the end of its useful economic life.

 

The method of depreciation for each class of depreciable asset is:

 

Computer equipment                                          -     3 - 4 years straight line

Office fixtures, fittings & equipment                -     4 - 7 years straight line

 

Impairment of Assets

Impairment tests on goodwill are undertaken annually at the balance sheet date. The recoverable value of goodwill is estimated on the basis of value in use, defined as the present value of the cash generating units with which the goodwill is associated. When value in use is less than the book value, an impairment is recorded and is irreversible.

 

Other non-financial assets are subject to impairment tests whenever circumstances indicate that their carrying amount may not be recoverable. Where the carrying value of an asset exceeds its estimated recoverable value (i.e. the higher of value in use and fair value less costs to sell), the asset is written down accordingly. Where it is not possible to estimate the recoverable value of an individual asset, the impairment test is carried out on the asset's cash-generating unit. The carrying value of property, plant and equipment is assessed in order to determine if there is an indication of impairment. Any impairment is charged to the statement of comprehensive income. Impairment charges are included under administrative expenses within the consolidated statement of comprehensive income. 

 

Taxation and deferred taxation

               Corporation tax payable is provided on taxable profits at prevailing rates.

 

Deferred tax assets and liabilities are recognised where the carrying amount of an asset or liability in the balance sheet differs from its tax base, except for differences arising on:

·      the initial recognition of goodwill; and

·      the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction affects neither accounting nor taxable profit.

 

Recognition of deferred tax assets is restricted to those instances where it is probable that future taxable profit will be available against which the asset can be utilised. The amount of the asset or liability is determined using tax rates that have been enacted or substantively enacted by the balance sheet date and are expected to apply when the deferred tax liabilities/(assets) are settled/(recovered).

 

Deferred tax assets and liabilities are offset when the Group has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority on either:

 

·      the same taxable Group company; or

·      different Group entities which intend either to settle current tax assets and liabilities on a net basis, or to realise the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax assets or liabilities are expected to be settled or recovered.

 

2.        CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS

 

The preparation of these financial statements has required management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. These judgments and estimates are based on management's best knowledge of the relevant facts and circumstances, having regard to prior experience, but actual results may differ from the amounts included in the financial statements. Information about such judgments and estimations is contained below, as well as in the accounting policies and accompanying notes to the financial statements.

 

Impairment of goodwill and intangible assets

The Group is required to test, on an annual basis, whether goodwill has suffered any impairment. Other intangible assets are tested whenever circumstances indicate that their carrying value may not be recoverable. The recoverable amount is determined based on value in use calculations. The Group has not impaired any goodwill or intangible assets during the year (2016: £Nil).

 

3.         SEGMENTAL INFORMATION

 

A segmental analysis of revenue and expenditure for the period is:

 

		Investment Management	Advisory Support	2017	2016
		£'000	£'000	£'000	£'000
REVENUE
Fees and Commissions		1,660	34,739	36,399	29,505
Other		-	-	-	345
		------------	---------------	-------------	-------------
TOTAL REVENUE		1,660	34,739	36,399	29,850
		------------	---------------	-------------	-------------
Cost of Sales		(278)	(28,357)	(28,635)	(24,175)
Administrative Expenses		(909)	(4,952)	(5,861)	(4,885)
Group costs				(2,803)	(3,559)
				-------------	-------------
Loss from operations				(900)	(2,769)
				======	======

 

The segmental analysis above reflects the parameters applied by the Board when considering the Group's monthly management accounts. The Directors do not consider a division of the balance sheet to be appropriate or useful for the purposes of understanding the financial performance and position of the Group.

 

During the period under review the Group operated, and earned revenue exclusively within the UK.

 

4.	LOSS FROM OPERATIONS
		2017	2016
		£'000	£'000
	This is arrived at after charging:
	Staff costs (see note 5)	4,164	3,155
	Depreciation	93	48
	Amortisation of intangible fixed assets	689	688
	Loss on adjustments to deferred consideration	-	1,297
	Operating lease expense - property	254	199
	Auditors' remuneration in respect of the Company	8	8
	Audit of the Group and subsidiary undertakings	62	60
	Auditors' remuneration - non-audit services -interim	2	4
	Auditors' remuneration - non-audit services -taxation	13	10
		------------	-----------
		85	82
		=======	======

 

5.	STAFF COSTS
		2017	2016
		£'000	£'000
	Staff costs for all employees, including directors and development
	staff consist of:
	Wages, fees and salaries	3,358	2,361
	Social security costs	356	242
	Pensions	144	24
		-----------	-----------
		3,858	2,627
	Share based payment charge	306	528
		-----------	-----------
		4,164	3,155
		=====	=====
		2017	2016
	The average number of employees of the group during the year	Number	Number
	was as follows:
	Directors and key management	7	6
	Operations and administration	89	60
		-----------	-----------
		96	66
		======	======

The remuneration of the highest paid director was £192,391 (2016: £151,325). The total remuneration of key management personnel was £933,259 (2016: £828,766).

 

Directors' Detailed Emoluments

 

Details of individual Directors' emoluments for the year are as follows:

 

	Salary & fees	Benefits in kind & allowances	Pension contributions	Total 2017	Total 2016
	£	£	£	£	£
O Cooke	146,667	18,457	14,664	179,788	148,942
B Raven	156,667	20,060	15,664	192,391	151,325
P Young*	25,000	-	-	25,000	25,000
R Rennison*	25,000	-	-	25,000	25,000
	----------------	----------------	--------------	----------------	----------------
	353,334	38,517	30,328	422,179	350,267
	========	=======	=======	=======	=======

 

*Denotes non-executive Director

 

All pension contributions represent payments into defined contribution schemes.

 

6.	TAXATION ON LOSS FROM ORDINARY ACTIVITIES
		2017	2016
		£'000	£'000
	Current tax credit	(19)	(6)
	Deferred tax credit	(509)	(369)
		------------	------------
	Tax credit for the year	(528)	(375)
		======	======

The tax assessed for the period differs from the standard rate of corporation tax in the UK applied to loss before tax.

 

		2017	2016
		£'000	£'000
	Loss on ordinary activities before tax	(1,104)	(2,792)
		======	======
	Loss on ordinary activities at the standard rate of corporation tax in
	the UK of 20% (2016: 20%)	(221)	(558)
	Effects of:
	Unutilised losses	100	-
	Expenses not deductible for tax purposes	107	289
	Other timing differences	(456)	(88)
	Differences between capital allowances and depreciation	10	23
	Capital gains	-	54
	Non-taxable income	(27)	(24)
	Adjust closing deferred tax to average rate of tax	(41)	(85)
	Deferred tax not recognised	-	14
		---------------	---------------
Tax credit for the year		(528)	(375)
		======	======

 

The tax assessed for the period differs from the standard rate of corporation tax in the UK applied to loss before tax.

 

7.	LOSS PER SHARE
		2017	2016
		£'000	£'000
	Loss per share has been calculated using the following:
	Loss (£'000)	(576)	(3,183)
	Weighted average number of shares ('000s)	418,662	289,631
		--------------	--------------
	Basic loss per ordinary share	(0.13)p	(1.10)p
		=======	=======

 

Loss per ordinary share has been calculated using the weighted average number of shares in issue during the relevant financial periods. IAS 33 requires presentation of diluted EPS when a company could be called upon to issue shares that would decrease earnings per share, or increase the loss per share. For a loss-making company with outstanding share options, net loss per share would be decreased by the exercise of options. Therefore, as per IAS33 the antidilutive potential ordinary shares are disregarded in the calculation of diluted EPS. 

 

 

 

8.	TANGIBLE FIXED ASSETS
		Motor	Computer	Office fixtures fittings and
		Vehicles	equipment	equipment	Total
		£'000	£'000	£'000	£'000
	Cost
	Balance at 1 April 2016	-	219	379	598
	Additions	-	80	100	180
	Acquisitions	28	-	105	133
		---------	---------	--------------	---------------
	Balance at 31 March 2017	28	299	584	911
		---------	---------	--------------	---------------
	Accumulated depreciation
	Balance at 1 April 2016	-	178	163	341
	Depreciation charge	4	29	60	93
	Acquisitions	11	-	85	96
		---------	---------	--------------	---------------
	Balance at 31 March 2017	15	207	308	530
		---------	---------	--------------	---------------
	Net Book Value
	At 31 March 2017	13	92	276	381
		=====	=====	=====	=====
	At 31 March 2016	-	41	216	257
		=====	=====	=====	======

 

9.	INTANGIBLE ASSETS	Customer	Regulatory	Goodwill	Other
		& Adviser	Approvals	Arising on	Intangible
		Relationships	& Systems	Consolidation	Assets	Total
		£'000	£'000	£'000	£'000	£'000
	Cost
	Balance at 1 April 2016	4,010	1,350	7,848	275	13,483
	Additions	-	-	-	199	199
	Acquisitions	1,455	465	6,903	-	8,823
	Disposals	(50)	-	-	-	(50)
		-------------	-------------	-------------	------------	---------------
	Balance at 31 March 2017	5,415	1,815	14,751	474	22,455
		-------------	-------------	------------	------------	---------------
	Accumulated amortisation
	Balance at 1 April 2016	879	430	205	-	1,514
	Impairment charges	-	-	-	-	-
	Acquisitions	298	-	-	-	298
	Amortisation	553	136	-	-	689
		------------	-----------	-----------	------------	---------------
	Balance at 31 March 2017	1,730	566	205	-	2,501
		-----------	------------	------------	------------	---------------
	Net Book Value
	At 31 March 2017	3,685	1,249	14,546	474	19,954
		======	======	======	======	=======
	At 31 March 2016	3,131	920	7,643	275	11,969
		======	======	======	======	=======

 

Customer and Adviser Relationships relate to identifiable relationships between acquired companies, their adviser network and the associated client bases.

 

Regulatory Approvals and Systems relate to the estimated costs incurred by acquired companies in obtaining authorisations to carry on their relevant business and in putting in place the appropriate staffing and information structures.

 

Amortisation is charged over a period between 5 and 10 years.

 

 

GOODWILL AND IMPAIRMENT
The carrying value of goodwill in respect of each cash generating unit is as follows:
				31 March 2017	31 March 2016
				£'000	£'000
Financial Advisory business				12,631	5,728
Investment Management business				1,915	1,915
				-------------	-------------
				14,546	7,643
				======	=======
In assessing the carrying value of goodwill the Directors have given consideration to the anticipated performance of each of these cash generating units as part of a value in use calculation. This consideration included reference to a generally accepted future medium term (three year) growth rate of 10%, followed by a long-term rate of 3%. It is also assumed a discount rate of 15%. It is considered that any reasonably possible changes in the key assumptions would not result in an impairment of the present carrying value of the goodwill.

 

ACQUISITIONS DURING THE PERIOD

 

Abacus Associates Financial Services Limited

 

In April 2016, the Group acquired 100% of the issued share capital of Abacus Associates Financial Services Limited, an independent financial advisory company, for a fixed initial consideration of £5.165m, of which £2.535m was settled at completion in cash, £0.13m through the adoption of a debt obligation, £1.5m through the issue to the vendor of 20m new ordinary shares of 1p each at an issue price of 7.5p per share and a further £1 million to be settled in cash on the first anniversary. In addition, the vendor is also entitled to potentially receive a performance-related deferred consideration, payable in cash in July 2018 subject also to certain other conditions relating to quality of service and customer satisfaction. The fair value of this consideration has been estimated to be £1.4m.

	Book	Fair value	Fair value
	value	adjustments	to Group
	£'000	£'000	£'000
Cost
Tangible fixed assets	36	-	36
Intangible fixed assets	342	815	1,157
Debtors	391	-	391
Cash at bank and in hand	1,341	-	1,341
Creditors due within one year	(366)	-	(366)
Deferred tax	-	(139)	(139)
	---------	--------------	---------
Net assets on acquisition	1,744	676	2,420
	---------	--------------	---------

Included in the Consolidated Statement of Comprehensive Income is gross revenue of £5,873,000 and profit of £557,000 arising from Abacus Associates Financial Services Limited. The primary reason for the acquisition was to increase the scale of the advisory business.

 

Price Bailey Financial Services Limited

 

In November 2016, the Group acquired 100% of the issued share capital of Price Bailey Financial Services Limited, an independent financial advisory company, for an initial consideration of £2.95m, of which £2.0m was settled at completion in cash and £0.95m through the issue to the vendor of 21,263,462 new Ordinary Shares of 1p each at an issue price of 4.4678p per share. In addition, a second fixed payment in cash is due upon the first anniversary of completion of £150,000 together with a variable payment of up to £500,000 in cash which will be reduced in the event of upheld complaints during the intervening period and so the total fair value of the consideration payable at the acquisition date was assessed as £3.6m.  A final deferred payment will be made upon the third anniversary of completion of the acquisition if the highest average closing price per Ordinary Share over any five-consecutive business day period in the three months prior to the third anniversary date is below 7.5 pence per share. In such an event the payment may be made either in cash or through the issue of additional Ordinary Shares. The adjustment payment is only applicable to 16 million of the consideration shares and accordingly the maximum adjustment will be £440,000.

 

	Book	Fair value	Fair value
	value	adjustments	to group
	£'000	£'000	£'000
Cost
Intangible assets	-	465	465
Debtors	202	-	203
Cash at bank and in hand	667	-	666
Deferred tax	-	(79)	(79)
Creditors due within one year	(412)	-	(412)
	---------	--------------	-----------
Net assets on acquisition	457	386	843
	---------	--------------	------------

 

Included in the Consolidated Statement of Comprehensive Income is gross revenue of £731,000 and profit of £103,000 arising from Price Bailey Financial Services Limited. The primary reason for the acquisition was to increase the scale and capability of the advisory business.

 

 

10.	TRADE AND OTHER RECEIVABLES				31 March 2017	31 March 2016
					£'000	£'000
	Trade receivables				748	498
	Prepayments and accrued income				942	589
	Amounts recoverable in respect of claims and complaints				-	1,418
	Other receivables				459	1,200
					-------------	-------------
					2,149	3,705
					======	======
11.	LIABILITIES				31 March 2017	31 March 2016
					£'000	£'000
	Current liabilities
	Trade payables				1,095	495
	VAT and social security liabilities				250	106
	Accruals				803	938
	Deferred consideration on acquisitions				2,002	4,476
	Other payables				870	1,810
	Corporation tax payable				49	1
	Loans				250	-
					---------------	---------------
					5,319	7,826
					======	======
	Non-current liabilities
	Loans				2,000	250
	Deferred consideration				1,100	-
					-------------	--------------
					3,100	250
					======	======

 

Novia Financial plc and Cocoon Investment Holdings Ltd have provided the Company with a three year, unsecured, convertible loan facility of up to an aggregate of £750,000, for business development and working capital purposes of which £250,000 had been drawn down at the balance sheet date.  Interest on amounts drawn down under the facility accrue at the rate of 1 per cent per annum over the base rate and are payable quarterly.  Any funds drawn down under the Loan Facility fall due for repayment at the end of the term, being 27 August 2017.  The principal sum outstanding under the Loan Facility may be converted, at a share price of 7.5 pence per share, into new ordinary shares in the capital of the Company at any time prior to the end of the term at the discretion of the Lenders.

 

The Company entered into a three-year, £2 million debt facility with Assetz SME Capital Ltd which is secured by a charge in favour of Assetz SME Capital Ltd over the Group's shares in Abacus Associates Financial Services Limited. Interest on the facility, at the rate of 9% per annum, is paid monthly and repayment of the principal sum is due in April 2019.  The facility can be extended at the Company's discretion for a further period of up to two years.

                                                                                                                                      

12.	PROVISIONS
		Total
		£'000
	Balance at 1 April 2016	1,640
	Payments to settle claims	(953)
	Provisions utilised/released	(641)
		-------------
	Balance at 31 March 2017	46
		=======

 

The amounts paid predominantly relate to claims arising from the conduct of thematic past business reviews and from specific complaints received from clients of Financial Limited's network members, a company that has now been liquidated.

 

 

13.	DEFERRED TAX
		Total
		£'000
	Balance at 1 April 2016	702
	Deferred tax credit in the year	(509)
	Arising on acquisitions	203
		-------------
	Balance at 31 March 2017	(396)
		=======

 

	The deferred tax provision comprises:	31 March 2017	31 March 2016
		£'000	£'000
	Accelerated capital allowances	(17)	-
	Unutilised tax losses	(419)	-
	Deferred tax on intangibles	832	702
		-------------	-------------
		396	702
		======	======

 

14.       FINANCIAL RISK MANAGEMENT

 

The Group is exposed to risks that arise from its use of financial instruments. These financial instruments are within the current assets and current liabilities shown on the face of the statement of financial position and comprise the following:

 

Credit risk

The Group is exposed to credit risk primarily on its trade receivables, which are spread over a range of Investment platforms and advisers. Receivables are broken down as follows:

 

		31 March 2017	31 March 2016
		£'000	£'000
	Loans and receivables
	Trade receivables	748	498
	Cash and cash equivalents	4,558	3,385

 

The table below illustrates the due date of trade receivables:

		31 March 2017	31 March 2016
		£'000	£'000
	Current	697	407
	31 - 60 days	-	-
	61 - 90 days	-	-
	91 - 120 days	-	3
	121 and over	51	88
		-------------	-----------
		748	498
		======	======

         Liquidity risk

Liquidity risk arises from the Group's management of working capital and the finance charges and repayments of its liabilities.

 

The Group's policy is to ensure that it will have sufficient cash to allow it to meet its liabilities when they become due and so cash holdings may be high during certain periods throughout the period.

 

Other than the loans referred to in Note 11, the Group currently has no bank borrowing or overdraft facilities.              

 

The Group's policy in respect of cash and cash equivalents is to limit its exposure by reducing cash holding in the operating units and investing amounts that are not immediately required in funds that have low risk and are placed with a reputable bank.

 

Cash at bank and cash equivalents

		31 March 2017	31 March 2016
		£'000	£'000
	At the year end the Group had the following cash balances:	4,558	3,385
		======	======

Cash at bank comprises Sterling cash deposits held within a number of banks. At 31 March 2017, £252,000 (2016: £1,470,000) of cash is held on deposit in special interest bearing accounts to maximise returns.

 

All monetary assets and liabilities within the group are denominated in the functional currency of the operating unit in which they are held. All amounts stated at carrying value equate to fair value.

 

Financial liabilities at amortised cost
Trade payables			1,095	495
Accruals			803	938
			======	======

 

 

The table below illustrates the ageing of trade payables:

				31 March 2017	31 March 2016
				£'000	£'000
	Current			1092	487
	31 - 60 days			3	-
	61 - 90 days			-	-
	91 - 120 days			-	-
	121 and over			-	8
				----------------	---------------
				1,095	495
				========	========

        

         Capital Disclosures and Risk Management

 

The Group's management define capital as the Group's equity share capital and reserves.

 

The Group's objective when maintaining capital is to safeguard the it's ability to continue as a going concern, so that in due course it can provide returns for shareholders and benefits for other stakeholders.

 

The Group manages its capital structure and makes adjustments to it in the light of changes in the business and in economic conditions. In order to maintain or adjust the capital structure, the Group may from time to time issue new shares, based on working capital and product development requirements and current and future expectations of the Company's share price.

 

Share capital is used to raise cash and as direct payments to third parties for assets or services acquired.

 

Market risk

 

Interest rate risk

Interest rate risk is the risk that the value of financial instruments will fluctuate due to changes in market interest rates. The Group considers the interest rates available when deciding where to place cash balances. The Group has no material exposure to interest rate risk.

 

15.	SHARE CAPITAL	31 March 2017	31 March 2016
		£'000	£'000
	Called up share capital
	Allotted, called up and fully paid
	533,614,920 Ordinary shares of 1 pence each
	(2016: 291,348,638 shares of 1 pence each)	5,336	2,913
	10,000,000 "A" Ordinary shares of 0.01 pence each	-	1
	Nil (2016: 100,000 "G" Ordinary shares of 1 pence each)	-	-
	30,450,078 Deferred shares of 9p each	2,742	2,741
	465,344,739 Deferred "A" shares of 0.99 pence each	4,607	4,607
		------------	------------
		12,685	10,262
		======	======

 

During the period, the Company issued options within its EMI (Enterprise Management Incentive) Share Option Scheme to employees over a total of 7,720,000 ordinary shares of 1p each with an exercise price of 5.25p per share.  These options are capable of exercise between February 2017 and March 2022.

 

On 1 April 2016, 20,000,000 new Ordinary shares of 1p were issued at an issue price of 7.5p per share and a further 24,615,385 new ordinary shares of 1p were issued at an issue price of 3.25p in connection with acquisition of Abacus Associates Financial Services Limited.

 

On 14 April 2016, 84,746 new ordinary shares of 1p were issued at an issue price of 5.9p per share in satisfaction of an historical obligation.

 

On 28 April 2016, 10,057,938 new Ordinary shares of 1p were issued at an issue price of 4.315p in connection with the acquisition of Standard Financial Group Limited.

 

On 13 June 2016, 10,000,000 A shares of 0.01 p each were converted into 100,000 Ordinary shares of 1p each.

 

On 22 June 2016, 49,523,975 new Ordinary shares of 1p were issued at a price of 7.5p per share in satisfaction of the deferred consideration for Blacksquare Limited.

 

On 4 July 2016, 155,631 new Ordinary shares of 1p were issued at a price of 6.4p per share in satisfaction of historical obligations.

 

On 30 November 2016, 70,000,000 new ordinary shares of 1p were issued at a price of 3.0p per share and a further 21,263,462 new ordinary shares of 1p were issued at a price of 4.5p per share in connection with the acquisition of Price Bailey Financial Services Limited.

 

On 19 January 2017, 166,666 new ordinary shares of 1p were issued at an issue price of 3.0p per share and 444,444 new ordinary shares of 1p were issued at a price of 7.5p per share in satisfaction of historical obligations.

 

On 23 February 2017, with the consent of the Company's shareholders, the 100,000 G Ordinary shares were converted into 45,854,034 ordinary shares of 1p. The conversion took the form of a bonus issue of shares which was funded out of the Company's share premium account.

 

The following describes the nature and purpose of each of the Company's reserves:

 

Reserve                                    Description and purpose

 

Share capital                            Amount subscribed for share capital at nominal value.

Share premium                         Amount subscribed for share capital in excess of nominal value.

Retained deficit                       Cumulative net gains and losses recognised in the consolidated statement of comprehensive income.

 

 

16.	SHARE BASED PAYMENTS
	During the period the Company issued options over 7,720,000 Ordinary shares under the terms of its EMI Share Option Scheme.   These options have been valued using the Black- Scholes pricing model. The weighted average of the assumptions used in the model are:
	Share price at grant	3.32p
	Exercise price	5.25p
	Expected volatility	112%
	Expected life	7.08 years
	Risk free rate	1.2%
	Expected volatility has been determined by reference to the fluctuations in the Company's share price between the formation of its current group structure and the grant date of the share options.
				Ordinary shares
				Weighted
				average price
				(pence)	Number
	Outstanding at the beginning of the year			4.84	18,450,000
	Granted during the year Lapsed during the year			5.25 4.08	7,720,000 (4,950,000)
					-------------------
	Outstanding at the end of the period			5.18	21,220,000
					=========

 

The exercise price of options outstanding at the end of the year, 1,500,000 of which had vested and were exercisable, was 5.18p and their weighted contractual life was 8.64 years.

 

There were no options over Ordinary shares exercised in the period. The weighted average fair value of each option granted during the current period was assessed as being 2.78p and their weighted average contractual life was 7.08 years.

 

The Company had previously also issued EMI options over 100,000 G Ordinary Shares for which the performance criteria has now been met and these options were exercised in the year. These options were valued by reference to an assessment of the Company's future market capitalisation.

 

17.	LEASING COMMITMENTS	31 March 2017	31 March 2016
		£'000	£'000
	The Group's future minimum lease payments fall due as follows:
	Within one year	252	170
	Between one and two years	171	116
	Between two and five years	153	129
		-------------	-------------
		576	415
		=====	=====

 

18.    RELATED PARTY TRANSACTIONS

 

Payments of £56,232 (2016: 14,825) were made to threesixty Support LLP, a firm in which Philip Young is Managing Director, in relation to compliance services.

 

During the period, Tavistock Wealth Limited received fees of £1,162,530 (2016: £567,744) under the terms of an agreement entered into with Investment Fund Services Limited ("IFSL"). IFSL is a company of which Andrew Staley, a significant shareholder in Tavistock Investments Plc, is a director.

 

 

TAVISTOCK INVESTMENTS PLC                                                                                 Company number 05066489

COMPANY BALANCE SHEET

AS AT 31 MARCH 2017 - PREPARED UNDER UK GAAP

 

		At 31 March 2017		At 31 March 2016
		£'000	£'000	£'000	£'000
Fixed assets
Investments	III		22,360		11,697
Tangible fixed assets	IV		281		216
Intangible fixed assets	V		474		275
			-----------------		-----------------
			23,115		12,188
Current assets
Debtors	VI	1,377		1,450
Cash at bank and in hand	VIII	1,089		591
		-----------------		-----------------
		2,466		2,041
Creditors: amounts falling due within
one year	IX	(4,738)		(6,069)
		----------------		----------------
Net current  liabilities			(2,272)		(4,028)
Debtors: amounts falling due after one year	VII		299		-
Creditors: amounts falling due after one year	X		(3,100)		-
			---------------		---------------
Total assets less total liabilities			18,042		8,160
			=======		=======
Capital and reserves
Called up share capital	XI		12,685		10,262
Share premium account			27,818		20,688
Retained losses			(22,461)		(22,790)
			------------------		------------------
Shareholders' funds			18,042		8,160
			=========		=========

   

   

The Company's loss for the year is £671,000 (2016: Loss of £2,206,000).

 

    The financial statements were approved by the Board and authorised for issue on 31 July 2017.

 

 

    Oliver Cooke

Chairman

 

The notes below form part of the Company financial statements.

 

STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 MARCH 2017 - PREPARED UNDER UK GAAP

 

 

	Share Capital	Share Premium	Retained deficit	Shareholder funds
	£'000	£'000	£'000	£'000
31 March 2015	10,245	20,576	(20,584)	10,237
Issue of shares	17	112	-	129
Loss before and after tax	-	-	(2,206)	(2,206)
	-------------	--------------	---------------	--------------
31 March 2016	10,262	20,688	(22,790)	8,160
	-------------	--------------	--------------	-------------
Issue of shares	2,423	7,130	-	9,553
Loss after tax	-	-	(671)	(671)
Dividends received	-	-	1,000	1,000
	-------------	--------------	---------------	--------------
31 March 2017	12,685	27,818	(22,461)	18,042
	-------------	--------------	--------------	-------------

 

I.             ACCOUNTING POLICIES

 

The principal accounting policies applied are summarised below.

 

Basis of preparation

The financial statements have been prepared under the historical cost convention as modified by the revaluation of Tangible Assets and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in the United Kingdom and the Republic of Ireland and the Companies Act 2006.

 

FRS 102 is mandatory for accounting periods beginning on or after 1 January 2015.

 

The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires management to exercise judgment in applying the company's accounting policies (see note 2 in the Group financial statements).

 

These accounts do not include a Cashflow Statement or a Financial Instruments note as these are disclosed in the Group financial statements.

 

All accounting policies that are not unique to the company are listed on pages 19 -21. All additional accounting policies have been applied as follows:

 

Going concern

The Directors' are of the opinion that the Company has sufficient working capital for the foreseeable future and on this basis, consider it appropriate that the accounts have been prepared on a going concern basis.

 

               Valuation of investments

Investments held as fixed assets are stated at cost less any provision for impairment in value.

 

II.            LOSS FOR THE FINANCIAL PERIOD

 

The Company has taken advantage of the exemption allowed under s408 of the Companies Act 2006 and has not presented its own profit and loss account in these financial statements.  The Company's loss for the year was £671,000 (2016: Loss of £2,206,000). 

 

The average number of employees of the company during the year was 8 (2016: 4) and total staff costs were £1,209,000 (2016: £603,000).

 

III.	FIXED ASSET INVESTMENTS				31 March 2017	31 March 2016
					£'000	£'000
	Subsidiary undertakings
	Cost
	Balance at 1 April 2016				12,024	11,034
	Additions				10,663	990
					--------------	--------------
	Balance at 31 March 2017				22,687	12,024
	Provisions
	Balance at 1 April 2016				(327)	(100)
	Provision for impairment				-	(227)
					--------------	--------------
	Balance at 31 March 2017				(327)	(327)
					--------------	--------------
	Carrying value of investments				22,360	11,697
					=======	=======
Name		Holding	Registered Office Address
Tavistock Wealth Limited		Direct	1 Bracknell Beeches, Old Bracknell Lane, Bracknell, RG12 7BW
Tavistock Partners Limited		Direct	1 Bracknell Beeches, Old Bracknell Lane, Bracknell, RG12 7BW
Sterling McCall Limited		Indirect	1, The Cornerstone Market Place, Kegworth, Derby DE74 2EE
Tavistock Financial Limited		Direct	1 Bracknell Beeches, Old Bracknell Lane, Bracknell, RG12 7BW
Cornerstone Asset Holdings Limited		Direct	1, The Cornerstone Market Place, Kegworth, Derby DE74 2EE
Duchy Independent Financial Advisers Limited		Direct	1 Bracknell Beeches, Old Bracknell Lane, Bracknell, RG12 7BW
Abacus Associates Financial Services Limited		Direct	1 Bracknell Beeches, Old Bracknell Lane, Bracknell, RG12 7BW
Price Bailey Financial Services Limited		Direct	1 Bracknell Beeches, Old Bracknell Lane, Bracknell, RG12 7BW
PB Financial Planning Limited		Indirect	1 Bracknell Beeches, Old Bracknell Lane, Bracknell, RG12 7BW
Cheviot Financial Planning Limited		Indirect	1 Bracknell Beeches, Old Bracknell Lane, Bracknell, RG12 7BW
The Tavistock Partnership Limited		Direct	1 Bracknell Beeches, Old Bracknell Lane, Bracknell, RG12 7BW
Tavistock Direct Limited		Direct	1 Bracknell Beeches, Old Bracknell Lane, Bracknell, RG12 7BW

 

IV.	TANGIBLE FIXED ASSETS			Office fixtures
			Computer	fittings and
			equipment	equipment	Total
			£'000	£'000	£'000
	Cost
	Balance at 1 April 2016		56	199	255
	Additions		44	80	124
			---------	--------------	---------------
	Balance at 31 March 2017		100	279	379
			---------	--------------	---------------
	Accumulated depreciation
	Balance at 1 April 2016		32	7	39
	Depreciation charge		13	46	59
			---------	--------------	---------------
	Balance at 31 March 2017		45	53	98
			---------	--------------	---------------
	Net Book Value
	At 31 March 2017		55	226	281
			=====	=====	=====
	At 31 March 2016		24	192	216
			=====	=====	======

 

V.        INTANGIBLE FIXED ASSETS

 

Intangible fixed assets relate to the capitalisation of software, amounting to £199,000 (2016: £275,000) during the year ended 31 March 2017, there has been no amortisation in the year.

 

VI.	DEBTORS: due within one year			31 March 2017	31 March 2016
				£'000	£'000
	Amounts owed by subsidiary undertakings			1,150	610
	Trade debtors			74	48
	Other debtors			52	683
	Prepayments			101	109
				------------	------------
				1,377	1,450
				=====	=====

 

VII.	DEBTORS: due after one year			31 March 2017	31 March 2016
				£'000	£'000
	Deferred tax asset			299	-
				------------	------------
				299	-
				=====	=====

 

VIII.     CASH AND CASH EQUIVALENTS

 

			31 March 2017	31 March 2016
			£'000	£'000
	Cash at bank and in hand		1,089	591
			-------------	-------------
			1,089	591
			======	======

 

IX.	CREDITORS: amounts falling due within one year
				31 March 2017	31 March 2016
				£'000	£'000
	Term loan			250	250
	Trade creditors			202	245
	Accruals			167	172
	Other tax and social security			76	37
	Other creditors			233	1,022
	Deferred consideration			2,002	4,343
	Amounts owed to subsidiary undertakings			1,808	-
				------------	------------
				4,738	6,069
				======	======
X.	CREDITORS: amounts falling due after one year
				31 March 2017	31 March 2016
				£'000	£'000
	Term loans Deferred consideration			2,000 1,100	- -
				------------	------------
				3,100	-
				======	======

XI.         SHARE CAPITAL

              

    Details of the Company's share capital and the movements in the period can be found in Note 15 to the consolidated financial statements.

 

 

XII.        SHARE OPTIONS

         

EMI Share Option Scheme

 

Details of the share options outstanding at 31 March 2017 can be found in Note 16.

 

XIII. RELATED PARTY TRANSACTIONS

 

Advantage has been taken by the Company of the exemptions provided by Section 33.1A of FRS102 not to disclose group transactions in respect of wholly owned subsidiaries.